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Memorial Day marks the unofficial start of summer and a key moment for the US in its journey through the COVID-19 pandemic: All 50 states have begun—to varying degrees—easing COVID-19 related restrictions.

As restrictions on movement ease, we will start to get a handle on the answer to one very important question: What shape will the US economic recovery take?

As markets have bounced off what has proven at least a near-term bottom on March 23, many have commented on narrowing breadth—i.e., market leadership among a decreasing number of stocks. Specifically, many noted the bounce was largely driven by the big tech stocks—particularly those commonly known as the FANG stocks (Facebook, Amazon, Netflix and Google, with some adding Microsoft and Apple and rendering the acronym unpronounceable). It’s worth noting that not all of those names are classified as technology companies from a GICS sector perspective: Facebook, Netflix and Google (Alphabet) all fall in the communication services sector, while Amazon is considered discretionary and Microsoft is the only “true” technology company.

Nevertheless, sector returns—in the US and overseas—tell a slightly different story from a tech(/communication services/discretionary)-led bounce.

Another day, another grim US economic milestone amid the COVID-19 pandemic. On May 8, the US Labor Department released its April Employment Situation report. The magnitude of the numbers was momentous—nonfarm payroll employment fell by 20.5 million people and the unemployment rate jumped to 14.7%, from 4.4% in March.

As the COVID-19 pandemic evolves, emerging markets are set to take center stage. The US, Italy and other developed markets appear to be flattening the curve and starting to reopen their economies. In comparison, many emerging markets appear to be in much earlier phases of an outbreak. Within EM, India is an especially intriguing country to watch as it seems to be managing the pandemic better than previously feared.

India has the seemingly right conditions for a high number of cases and rapid transmission:

The Q1 market selloff was broad-based and intense, fueled by deep uncertainty about the pandemic’s true threat. In our view, the market did little to discriminate among individual firms, preferring to re-rate sectors given the short timeframe, rapid price action and lack of information.

Of course, our process is built to capitalize on market dislocations, when fear and uncertainty dominate, as is the case in our current environment. But we are also vigilantly risk-aware. This is where a thoughtful and repeatable process makes all the difference.

Oil has been the lead story recently—for a few reasons. In January, Saudi Arabia and Russia kicked off a heated competition for market share—after several years of cooperating and coordinating output in order to attempt to control oil prices. The result has been a well-documented collapse in oil prices—and growing challenges for oil producers and investors alike. Though it seems the near-term race to the bottom may have concluded, it also seems unlikely prices rocket back in the near term. Here are six interesting charts showcasing some of the recent phenomena.

Governments globally have responded to the ongoing COVID-19 pandemic variously—some have effectively shuttered their economies, full stop; others have taken less radical approaches (like Sweden). Similarly on the fiscal front, some governments have passed sweeping spending packages aimed at dulling a full shutdown’s likely economic impact. Top of this list in terms of scale is the US, where Congress passed and the President signed a roughly $2 trillion aid package on 27 March 2020. In the intervening weeks (yes, it’s only been weeks—believe it or not), some countries have followed suit—in intention if not in magnitude. Japan’s cabinet approved a $1 trillion package on 7 April. The EU is struggling to agree on a €500 billion package (more on the EU momentarily).

Amid significant market volatility due to the COVID-19 pandemic, we remain steadfast in our commitment to our investment philosophy. With a foundation in long-term structural tailwinds, resilient businesses and strong operators, our approach is designed for not only good times but challenging ones as well. Acknowledging the unprecedented nature of these circumstances and the uncertainty of a global health crisis, we thought a few words about our investment approach and how the investment team is spending its time would be appropriate.

Despite the worst selloff for credit since the great financial crisis, investment grade companies set a record level of new issuance in March. The thawing of primary market activities comes just two weeks after the Fed returned to its crisis-era playbook, announcing several new emergency lending facilities to contain the fallout of the COVID-19 pandemic—including the unprecedent measure of purchasing investment grade debt in both the primary and secondary markets. Facing evaporating liquidity and a severe contraction in credit conditions, the Fed effectively moved to become the liquidity provider of last resort to facilitate price discovery, reopen primary market activity and stave off the risk of a potential credit crisis.

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